Trivago has come across a number of obstacles in 2020

February 27, 2020
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Hotel booking platform, Trivago, launched its IPO in 2016- its goal was to join the other online travel agency stocks like Booking Holdings (Priceline Group at the time), Expedia, and Tripadvisor. 

At first, Trivago shares surged as revenue growth boomed. But the bull story soon changed as the company's relationship with Booking, its biggest partner, soured and the competitive landscape in the travel industry changed. 

Alphabet's Google has become a major player in hotel meta-search, which is Trivago's core business, pressuring established online travel agencies. Its bidding partners like Expedia and Booking Holdings have begun focusing on generating more direct traffic to their sites rather than through Trivago; and the industry in general is maturing as growth is slowing across the board.

Trivago's fourth-quarter earnings report makes clear that those trends are likely to persist through 2020. The stock recently plunged as much as 21% as revenue fell 7% to 155.5 million euros ($169.7 million), a reflection of the company's decision to pull back on marketing to get more valuable search traffic. On the bottom line, adjusted EBITDA fell by 33% to 18.4 million euros, and earnings per share slipped from 0.03 euros to 0.01 euro.

New CEO Axel Hefer, who was recently promoted from CFO, summed up the headwinds in management's letter to shareholders. Describing Trivago's outlook for the industry, he said:

"In the past few years, the industry dynamic has changed as growth has slowed, and large players have focused more on their profitability. At the same time, competition has increased."

Read more here

February 27, 2020

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